Guest Commentary: Debunking the $2400 Rental Figure in Nishi

With a 0.2% vacancy rate, one of the lowest in America, Davis is an extremely hostile market for renters. The implausibly short supply of rental housing creates conditions where landlords can raise rents quickly and practically at will. According to Zillow ZRI metric on local rents, Davis rents rose 12% year over year this past March when many students were looking for housing. As the Davis campus continues to grow, the failure of both the campus and the community to provide additional housing means this crisis will only worsen.

However, with the upcoming vote on June 7th, you have the power to remedy this crisis with your vote.

As a fellow Aggie who also does research on housing policy, I strongly encourage you to vote “Yes” on Measure A.

Figure 1: Nishi Site

On one hand, the major argument for students to support Nishi is obvious to anybody who has tried to rent in this town: we need more housing, and the 1500 beds in rental units at Nishi will help relieve local housing pressures. The additional reasons are as follows:

It will provide $23 million in renovations to Davis streets that will ease congestion where I-80 meets downtown

It will provide a million dollars in funding for affordable housing

It will increase Davis’ resources to fund Davis schools

It was ranked the #1 project in the state by the Strategic Growth Council in competition for sustainability grants

It will create at least 1500 jobs

On the other hand, the central rebuttal to these claims put forward by No on A – which you may have seen on some lawn signs – is that it is “unaffordable housing.” As I’ll show, their claims are not only wrong, but also absurd. You might also hear opponents express concern about the “gentrification” Nishi will cause – this assertion is ludicrous. I’ll not only debunk it but demonstrate that the failure to build Nishi will actually increase gentrification in communities where it matters, like Sacramento.

Comparing Nishi’s Rents to The Davis Market: How Expensive Is It?

The first “No” argument is that Nishi will cost renters $2400 for a two bedroom. This is bogus. For my research, I have access to over 9,000 rental listings in Davis from 2015. Of the over 3,000 two-bedrooms listed in Davis in that year, only 13 were more expensive than this. (Or, for stats nerds: the No side’s estimate is 4 standard deviations from the mean, and we are supposed to delete observations three standard deviations above the mean as you may have learned in your stats class)! In everyday terms: these estimates are laughably high, and you should dismiss them.

So what are the REAL rents at Nishi?

I reached out to the YES on A campaign, and they reported the actual rents will probably be between $1500 and $1800 for a two bedroom, depending on inflation, labor costs and market trends. You might think, “wow that’s high!” But these estimates actually compare well to rents offered today.

Nishi is adjacent to campus. Housing adjacent to campus or in downtown is generally the most expensive in town, as shown by this heat map of those for rent listings mentioned earlier:

Figure 2: Heat Map of Per-Bedroom Rents in Davis Rental Listings 2015

So how much of Nishi’s high cost is a function of its adjacency to campus? Nishi rents will be less expensive than 27% to 38% of existing for-rental listings near campus on a per bedroom cost basis. For a project that’s brand new and pumped up with all the green bonuses I mentioned above, this is actually impressive. Brand new buildings that aren’t publicly subsidized are usually more expensive in their first couple years of operation.

The fact is, Nishi student rents will be well within the market range given their adjacency to campus and newness, and the No on A campaign’s “independent analysis” claims of extremely high rents are so extremely high as to be ridiculous. You might think that you yourself cannot afford $1500 for a two bedroom. In that case, you still benefit. As other students choose to live at Nishi, the number of people you will be competing with for housing in other parts of town will go down, making it more likely you will find the kind of housing you want. Despite the rumors flying around, the latest research suggests that market rate housing construction does in fact help slow growth in rents in the long term, just not as quickly as subsidized housing.

Gentrification

The second argument I’ve heard some express against Nishi is that it will “gentrify” Davis. In fact, the opposite might be true: if Nishi and other Davis housing projects fail, gentrification may get worse–in Sacramento. According to the definition of gentrification developed by the federal government and decades of researchers, gentrification isn’t something that can happen in Davis. As it’s defined, gentrification can only take place in a previously affordable community (usually community of color) which had previously experienced some form of public disinvestment or neglect before being “discovered” by yuppies and the developers who cater to them. By this definition, many of the neighborhoods that young Davis grads are flocking to, like Oak Park in Sacramento, are experiencing rapid gentrification. This trend of people living in Sacramento and driving to Davis is significant that our regional planning agency, SACOG, openly weighed in to support Nishi.

Figure 3: Nishi Today. Not only is no human being displaced, but the development is designed so the existing tree-residents aren’t displaced either.

In fact, it is the unwillingness suburbs like Davis to build more housing that encourages young families to gentrify other communities like Oak Park. In this way, Davis is analogous to Mountain View–home of Google–whose inability to produce housing for Google’s growing workforce has contributed to gentrification in San Francisco proper. The results are the Google Bus wars you now see playing out on national news, with the employees of suburbs like Mountain View (and Davis) pushing people of color out of core urban communities like the Mission (and Oak Park).

If Measure A fails, it will send a message to other developers that building in Davis on any site that needs voter approval is not worth it. This would mean that new housing in Davis could stagnate while the demand by students and professionals continues to grow. Who knows, maybe students priced out of Davis will start gentrifying Woodland and displacing people there… Is that the future you want for this region?

So if you’re pro-Housing and Anti-Gentrification, what do you do?

The answer is you vote Yes on A. Davis’ history as an exclusive community that doesn’t build enough housing to meet the need must end. The failure to do this means ever higher rents in Davis and more gentrification of neighboring communities. Measure A comes with $23 million dollars in investment to improve traffic conditions in town, plus other benefits for local schools and the tax base. It also has 1500 more beds for students at a time when the student population is growing. It’s time to vote yes on Measure A.

Matthew Palm is a Davis resident and UC Davis Grad student who is currently wrapping up a doctorate focusing on the intersections of housing and transportation policies at the state and regional levels.

you said” Nishi rents will be less expensive than 27% to 38% of existing for-rental listings near campus on a per bedroom cost basis. ”

You pulled these numbers out of the air, why would they be less expensive even if they are just comparable? They will be new, large, nice and close to campus. Your assertion is baseless as far as I can see anywhere.

The town has been complaining about mini-dorms with overcrowded living conditions. It starting to look like the Nishi apartments might also be overcrowded mini-dorms as that’s the only way many students can afford to live there.

Every time I stated that the estimated rental price of $2,400+ for rental an 1,100 sq. ft apartment, I referenced the fact that this was based on an independent estimate by the City’s own hired consultant that the average rent projected for the apartments would be $2.20/sq. ft (Nishi Property Development Framework Plan, – the “Goodwin Report”, Table 2, January 4, 2016).

The developer howled when this number was used claiming I cherry-picked the apartment size to misconstrue the data. Yet the 1,100 sq ft apartment size is the exact median apartment size with exactly 176 larger units and 176 smaller units. What could be more fair in reporting the data than picking the median apartment size and applying the estimated average rental price to it? Sounds reasonable doesn’t it?

Alan, It would be more honest if you stated a range, rather than a median. It is a manipulation of statistics and doesn’t give a clear picture. It is like Roberta’s statement of a 68% increase in chances of giving birth to an autistic child, but she doesn’t say that the starting point is 1.4% per the CDC. Half of all of the units will be cheaper – likely the units devoted to student housing.

86% increase, not 68%, with a more recent study showing a doubling (i.e., 100% increase). Ask how many parents are comfortable with having their chances of having an autistic child go from 1 in 68 to 2 in 68.

Ask how many regulatory scientists would accept this kind of data as the basis for making policy. The voters of Davis are not the people to analyze and assess the risks associated with living near a freeway. The place for that is in front of regulatory bodies comprised of scientists trained to review many studies and assess the actual risk that people would face from expected exposure to a particular hazard. We go through this with pesticides and other chemicals as their risk is considered and regulations are adopted. Two studies are not a reasonable basis for making wholesale changes in land use policy. Do you suggest California put a moratorium on housing development adjacent to freeways statewide?

Ask how many regulatory scientists would accept this kind of data as the basis for making policy.

What is in fact done may not be the same thing as what should be done.

The voters of Davis are not the people to analyze and assess the risks associated with living near a freeway.

The voters in Davis might not be the best people to assess a lot of things about this project. And yet, the voters have said, through Measure R, that they want the right to determine whether a project is worthy enough to sacrifice agricultural land for. That means that voters make the best judgments that they can, based on the available evidence. In this case, much of the City’s own evaluation of the air quality at Nishi was based on Dr. Cahill’s research. Yet the City chose not to follow all of Dr. Cahill’s advice. It is not unreasonable for citizens to think that they would be better off sticking with the expert’s advice rather than the City’s advice or your advice.

Do you suggest California put a moratorium on housing development adjacent to freeways statewide?

As I have said many times before, based on my understanding of Dr. Cahill’s reasoning, this site has numerous factors (which I am sure you don’t need to me to enumerate again) that make it particularly problematic from an air quality standpoint.

But the data you keep citing about autism aren’t about uniquely problematic sites. They’re just about proximity to freeways. They’re based on zip codes.
We have regulatory bodies for a reason. The regulatory scientists who work for them are better equipped to make these decisions than voters who are much more likely to be swayed by emotions. And people who post things like “how many parents are comfortable with having their chances of having an autistic child go from 1 in 68 to 2 in 68” are using emotional arguments.
You’re citing limited studies, leaping to conclusions about causality with respect to autism. You and I and the Davis voters aren’t experts in autism. I don’t even know if Dr. Cahill is. I know of no agency or organization involved in autism that is making the claim that freeway proximity leads to any specific number of cases of autism. I know of no agency or organization involved in autism that is even making a clear assertion that environmental factors are the major cause of autism. They all say clearly that the cause of autism is unknown.
So your assertion in this regard is a play on emotions based on little evidence.

When women get pregnant — or at least when my kids were born — there is prenatal counseling that includes discussion of lifestyle behaviors that could affect the baby. Drinking, smoking, other issues were discussed at the doctor visits I attended. If the medical and disease control agencies conclude, based on significant accumulation of evidence, that where you live is an important consideration for an expectant mother with respect to autism, they can advise the parents of that. I would assume that obgyn’s and others keep up on the current recommendations about these things. So to put it simply, if autism is determined to be a credible risk from living there, the mother can move. These are not the sort of residences where people are likely to stay for extended periods. A very small number of women would be likely to encounter this issue, and they have an option readily available: move further from the freeway.
Paraphrasing what Rich Rifkin said in his column a week or so ago: all of these arguments are good reasons to choose not to live there if you’re worried about them.

Don Shor, right. The data I am citing about autism aren’t about uniquely problematic sites. But my conclusion about the possible health risks of living at Nishi isn’t just based on the autism risk alone. It’s based on that risk, conjoined with the asthma risk, conjoined with the heart attack risk, conjoined with the cancer risk. It’s all those things together, in my view, that make Nishi a site where residences shouldn’t be built. I am not making an emotional argument. I am pointing out how I think that others would behave upon hearing those risks, namely, that they wouldn’t want to live there. (But again, they will not be informed of those risks, and thus, not able to make that choice). That is based on treating others as I would want to be treated, which is a logical, not emotional, consideration of fairness and consistency. And I disagree with you about the role of the public in public policy. I do think that laypersons can and should become informed about scientific findings and have input into the decisions that get made. Finally, I think your suggestion that the family “can just move” is based on a lot of assumptions. A woman might not know she is pregnant for a few months. Her OB/GYN might not be as up on the recent studies as you imagine (without going into personal details, my experience with OB/GYNs is that they aren’t always). And the family will have a lease, and might not be able to secure alternate housing quickly. The fact of the matter is that the government should protect people from living in sites that are potentially harmful to their health. That role of government is recognized in numerous ways, and it is no different here.

As I hope was made clear by the piece, I am comparing it to for rent listings near the campus that were scraped from web and print sources from 2015. The total dataset has 9,000 observations and I believe the proximity to campus subset I used for the analysis has about 300 observations. therefore they are not baseless. They are based on observed rents in the community over the last 12 months. I’m happy to sit down with anybody who would like to go over the dataset and the script used to process it: mattdpalm@gmail.com. Unlike No on A, I am transparent about the information I use.

Does this database of 9000 entries include a good representation of houses or mainly apartments. I would think that what houses rent for is not very accessible data. We generally get our renters from Craig’s list. Maybe you can ask the large complexes what they charge but individual home rents I would expect are elusive.

Mike Harrington charges $1500+ for a two bedroom with only the kitchen and one bathroom as shared common space. (He converted the livingroom to a bedroom.) It’s no mystery why he would oppose the building of better housing nearby.

I write as a supporter of Nishi to call out some weaknesses in your line of reasoning.

1. First you claim to be making factual and statistically based arguments. Then you ask this
“So what are the REAL rents at Nishi?” as though this were the real rents at Nishi today. As is obvious, there are not rents at the currently non existent Nishi today. Therefore the numbers that you are putting up are just as speculative as those of the Nishi opponents. Now if what you had said was “So what are the real rents at Nishi likely to be?” I would have had no objection. I put this in the category of manipulating your data to favor your own projection since we obviously do not know what will happen in the future. This is certainly what the opponents have done as well.

2. I find your “gentrification” argument very weak. It is based on the idea that there are no pockets within Davis that represent very small areas that meet your definition “gentrification can only take place in a previously affordable community (usually community of color) which had previously experienced some form of public disinvestment or neglect before being “discovered” by yuppies and the developers who cater to them.” I would state that while “gentrification” as you have defined it cannot be applied to Davis as a whole, there are certainly small pockets within Davis that would meet this definition with Olive Drive being the prime example. Some people might make the same argument about Old East Davis. In fact, at one point there was a proposal to level and “upgrade” the entire area. Thankfully, that failed or I would not be enjoying my own home in the neighborhood I love today.

I have suggested to both sides making clarifications and stressing factual information in their promotions as needed. I hope that you will take my comments in the positive spirit in which they are intended.

Tia, disagree on point 1. The numbers the opposition are putting up are speculative based on one specific apartment size and the per footage cost of rent. The numbers that the author here puts up are those that the Vanguard reported a few weeks ago and seem to represent what the developer believes the actual rent will cost. I don’t see the basis for your objection. Not all speculation is created equal.

Why is the Vanguard publishing this silly stuff and so heavily promoting Nishi?

Has someone been promised something, or, someone doesn’t recognize that the developers themselves state that this will NOT BE HOUSING FOR FAMILIES.

The developers gave a presentation yesterday that was completely unconvincing regarding virtually every aspect of the project, from traffic and pollution to the housing. No good answers.

Alan Pryor, on the other hand, had the facts to make a convincing case that Nishi should go back to the drawing board. Ruff said they’d been working on this for 8 years, so a few more months to make improvements, including taking away the give away in millions of dollars of city taxpayer money, will make no difference, it will do the developers no harm.

“Why is the Vanguard publishing this silly stuff and so heavily promoting Nishi?”

Because the pro-Nishi side is submitting articles and the anti-side, aside from today’s by Dan Cornford isn’t? Ask Alan Pryor or Michael Harrington whether the Vanguard has turned down a single submitted article from their side? The question should be, why isn’t the no side producing more material?

Tia, I’m working with the academic definition of gentrification, which generally does not scale down to specific parcels and would consider Davis more the destination of white flighters and not so much a historically marginalized black or brown community. Olive Drive has arguably already been “gentrified”–aren’t there a large subset of nice new student dorms there?

As for me manipulating data, I’m happy to sit down with you in person and go over the data processing, you can email me at mattdpalm@gmail.com . As was explained in my piece, I am comparing the developer’s estimated rents to observed rents in 2015. These are not future projections.

“I am comparing the developer’s estimated rents to observed rents in 2015. These are not future projections.”

I do not doubt your numbers. What I have difficulty with is your use of them. When you say “developer’s estimated rents”, you are by definition talking about projections. These are projections of what he believes they will cost, not what they do cost, which cannot be known since they do not exist. I realize that one has to make these estimates and that using observed rents in one reasonable approach. But that does not make it fact as their might be many unforeseen variables affecting future construction.

Bottom line – rents at Nishi for a 2 bedroom apt (with communal living room and kitchen space) are projected to be between $1,500 and $1,800 per month. If 4 students share a 2 bedroom apt at Nishi, they can expect to pay between $375 and $450 per month rent, which is quite affordable. It is certainly a step up from living in a converted garage or a shed, which is happening all over Davis because there is not enough student housing.

Minus the additional beds needed to house the new workers at Nishi. Hard to see how this comes out ahead unless you make the completely unsubstantiated assumption that all/most residents will be students and all/most workers will be current Davis residents.

Some of the employees at Nishi may live at the for-sale housing. What’s the big deal? This is a good thing from virtually every conceivable perspective. The EIR estimated that 85% of residents in the rental housing will be students. If you have different data and information from that which was used in the EIR, I invite you to share it. Otherwise, your critique is not founded in facts.

Person or persons apparently paid to write under the name DavisforNishiGateway:

The “big deal” is that the project claims to be helping to solve Davis’s housing crisis and to help put Davisites to work, but if a new person moves to Davis and works at Nishi, that addresses neither of those needs. You can’t have it both ways.

What is the basis for the EIR’s claim that 85% of the residents will be students? How could they possibly determine something like that?

Yes Roberta, they are speculating on what can not be known and more likely not how it will turn out and using it to promote the project as almost fact. I agree with you, the dynamics can not be predicted.

I think this is a great article from someone who is experiencing the tight housing market firsthand as I. I also agree with Tia that there are some local impacts. I studied economics and statistics at UCD- macro economics– and learned early on about the supply and demand curve and in Davis we have a huge demand from a campus headed towards 39,000 students and a supply that is “iffy” at best. This is the main cause of our rental escalations as the writer points out. No on A says we can fix the affordable problem by adding a $12,000,000 tax on the rental project which costs over $25,000 per unit. We then spend that tax on section 8 housing that students don’t qualify for. Of course rents for students rise to cover the tax, and other rental units quickly follow suit which increases rent across the entire City in a market so skewed by the laws of supply and demand. No on A restricts supply further and supplies no money to affordable housing whereas Nishi contributes $1,000,000 and builds 440 units for students where they will walk and bike – reducing traffic.

Don’t confuse affordable housing with Section 8-which are housing choice vouchers. If Nishi had to pay their fair share of in-lieu fees, that money would be locally controlled. The City could use that money however they see fit for developing affordable homes for whatever population they would like to target.

I’m disappointed the author touts $1,000,000 as some great thing – he should know, and all of you should realize, that might subsidize 10 (maybe 15) affordable units.

And it’s not like the developer is doing this from the goodness of his heart. In fact, he tried to finagle his way out of that small contribution by proposing it go to a “community fund”. We had to fight hard to get Council to place those funds into the City Housing Trust Fund.

There – fixed your bullet points for you
– It will provide $3 million of the $11 million olive drive/Richards I80 interchange renovation. It will spend $20 million to build but not maintain new infrastructure for the new development and will create more traffic on Olive and in the downtown
– Thanks to a waiver from the city council It will provide only 1 million dollars in funding for affordable housing instead of actually including affordable housing or $11 million as is required by city law.
– It will increase the number of students in Davis schools and help fund the schools just like the rest of Davis
– Although it placed well in a competition for sustainability grants, it has failed to actually receive a grant from the Strategic Growth Council (part of the CA state government) likely because it does not meet the affordability requirements

– It will create at least 1500 jobs with ample on-sight parking in a difficult to get to part of town leading to further congestion at Richards and Olive

– It will provide $5 million ($3 million for the interchange and $2 million for the intersection) of the $12 million olive drive/Richards I80 interchange renovation. ($10 million for the interchange and $2 million for the intersection)

– It will spend $20 million to build new infrastructure for the new development and will create more traffic on Olive and in the downtown.

– In addition to the same level of normal taxes paid by all City parcels, it will pay and incremental amount between $300,000 and $630,000 per year in taxes for a Community Services District that will maintain the new infrastructure for the new development.

– Thanks to a waiver from the city council It will provide only 1 million dollars in funding for affordable housing instead of actually including affordable housing or $11 million as is required by city law.

– According to the DJUSD’s demographics consultants, it will help fund the schools just like the rest of Davis and not increase the number of students in Davis schools.

– Although it placed well in a competition for sustainability grants, it has failed to actually receive a grant from the Strategic Growth Council (part of the CA state government) possibly because it does not meet the affordability requirements

– It will create at least 1500 jobs with ample on-site parking in a difficult to get to part of town, potentially leading to further congestion at Richards and Olive.

I cannot leave such a gracious offer unanswered. You may be new to the Vanguard and thus unaware of my numerically challenged state. It was not your numbers that I was challenging but your grammatical choice of tenses. My objection to that remains, but I would never challenge anyone’s use use of numbers since my facility with them began and ended with just enough calculus to ace my pre-req. requirement test and then forget anything above basic grade school level math. So thank you, but it would not really help me, and since that was not the source of my objection, I will beg off on what would be a most embarrassing tutorial.

Now that really made me smile. I certainly did not feel attacked. That last about the invitation was me being sincere. As a doc, one of the things that I have found critical in my career is to know your own limitations, ask for more information when you need it, but back away and let some trusted other take charge when you are over your head !

“I will concede that Tia, I think you are right… it could all swing dramatically in a recession. But we can only work with what we know now…”

You made me smile. It was the fact that we can only work with what we know now that ultimately swayed me in favor of Nishi. I spent a long time and numerous painful conversations involving…..the dreaded numbers…..working through the health risks of Nishi. I consulted with an epidemiologist,a maternal/fetal specialist , and my statistics expert about relevant aspects from their perspective and ultimately said “That’s it. I do not, and will not have enough information within any kind of reasonable time frame to make a truly evidence based decision. This is true not because of a lack of personal diligence, but because the needed information does not exist at this point in time. And yet, now is the time to make a decision.

Surgeons are frequently faced with this situation. There may be undesired consequences if we act. There will most certainly be undesired consequences if we do not act. I came to the conclusion that housing a portion of the students who will be arriving at a site where they are most likely to be able to live a car limited lifestyle was the greater good and the lesser risk.

Roberta, your two questions really resonate for me. I find my self wrestling with a dilemma about what criteria should we be using to determine what the greater good is?

I also ask “Which alternative better fits the definition of sprawl, Nishi or West Village? I re-ask that question because expanding West Village appears to be the direction that UCD is considering in its latest round of LRDP discussions.

The saying goes – the perfect is the enemy of the good. Housing them on campus is actually not perfect, but certainly having the campus house the added students would be a preferred option – but sometimes we don’t get the best option and we have little control over what the campus does.

Wow, the Pugilist and I agree here. Yes, WV is sprawl, but it’s the better of the two options. Given that, let’s push (as Eileen Samitz has suggested) to get the University to densify what they have proposed, and at least make the best use of the land.

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